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Debenhams to be wound down putting 12,000 jobs at risk – as it happened Debenhams to be wound down putting 12,000 jobs at risk – as it happened
(4 months later)
Rolling coverage of the latest economic and financial news, with 25,000 jobs now at risk across two UK retailersRolling coverage of the latest economic and financial news, with 25,000 jobs now at risk across two UK retailers
The crisis gripping the UK’s high street has intensified today, with 25,000 jobs now at risk across two major chains.The crisis gripping the UK’s high street has intensified today, with 25,000 jobs now at risk across two major chains.
Debenhams, the 242-year old department store chain, is facing liquidation in the second major retail collapse in as many days.Debenhams, the 242-year old department store chain, is facing liquidation in the second major retail collapse in as many days.
Administrators announced this morning they are starting the process of winding down Debenhams, after attempts to find a buyer failed. Stores will remain open until stock has been cleared, but then -- unless a last-minute rescue is achieved -- they will shut.Administrators announced this morning they are starting the process of winding down Debenhams, after attempts to find a buyer failed. Stores will remain open until stock has been cleared, but then -- unless a last-minute rescue is achieved -- they will shut.
Debenhams employs around 12,000 people at 124 stores around the country, who now face a very worrying time in the run-up to Christmas.Debenhams employs around 12,000 people at 124 stores around the country, who now face a very worrying time in the run-up to Christmas.
The news came after JD Sports walked away from talks about an emergency rescue. That blow came hours after Arcadia - which operates concessions across Debenhams - collapsed into administration, putting 13,000 jobs at risk.The news came after JD Sports walked away from talks about an emergency rescue. That blow came hours after Arcadia - which operates concessions across Debenhams - collapsed into administration, putting 13,000 jobs at risk.
Geoff Rowley of FRP Advisory said Debenhams’ administrators had done their best to find a deal:Geoff Rowley of FRP Advisory said Debenhams’ administrators had done their best to find a deal:
Lucy Powell MP, Labour’s Shadow Minister for Business and Consumer, said the government must urgently set out how it plans to support the people affected by the collapse of both companies.Lucy Powell MP, Labour’s Shadow Minister for Business and Consumer, said the government must urgently set out how it plans to support the people affected by the collapse of both companies.
Powell also called for ministers to push Sir Philip Green to address the estimated £350m deficit in Arcadia’s pension fund.Powell also called for ministers to push Sir Philip Green to address the estimated £350m deficit in Arcadia’s pension fund.
As did London Mayor Sadiq Khan.As did London Mayor Sadiq Khan.
Chancellor Rishi Sunak said that the government “stands ready” to help workers at Arcadia and Debenhams.Chancellor Rishi Sunak said that the government “stands ready” to help workers at Arcadia and Debenhams.
Cabinet minister Michael Gove blamed management ‘missteps’ for Arcadia’s collapse, while declining to point the finger directly at Sir Philip Green.Cabinet minister Michael Gove blamed management ‘missteps’ for Arcadia’s collapse, while declining to point the finger directly at Sir Philip Green.
Analysts pointed out that Debenhams problems also predated the pandemic, and includedAnalysts pointed out that Debenhams problems also predated the pandemic, and included
Mounting debts, dating back before its private equity owners floated the company on the stock market in 2006Mounting debts, dating back before its private equity owners floated the company on the stock market in 2006
Long-term leases which tied the company to underperforming storesLong-term leases which tied the company to underperforming stores
A shrinking share of the clothing marketA shrinking share of the clothing market
Faced with the threat of rising unemployment, the TUC urged the government to do more to get people back to work, and to increase universal credit to support households.Faced with the threat of rising unemployment, the TUC urged the government to do more to get people back to work, and to increase universal credit to support households.
Female workers are likely to be worst hit by the retail collapse, as they make up a majority of roles in the sector.Female workers are likely to be worst hit by the retail collapse, as they make up a majority of roles in the sector.
Former chairman Sir Ian Cheshire is hopeful that some jobs will be saved, as its website and its more profitable stores could find buyers.Former chairman Sir Ian Cheshire is hopeful that some jobs will be saved, as its website and its more profitable stores could find buyers.
Here’s our news story on the decision to start liquidating Debenhams.Here’s our news story on the decision to start liquidating Debenhams.
Goodnight. GWGoodnight. GW
Adrian Palmer, professor of marketing at Henley Business School, says Debenham’s collapse highlights that department stores are now being supplanted by new formats - such as ‘pop-up’ retailers as well as online specialists.Adrian Palmer, professor of marketing at Henley Business School, says Debenham’s collapse highlights that department stores are now being supplanted by new formats - such as ‘pop-up’ retailers as well as online specialists.
Andy Brian, head of retail at law firm Gordons, suggests department stores can still have a future as a ‘house of brands’, but as part of a wider digital strategy:Andy Brian, head of retail at law firm Gordons, suggests department stores can still have a future as a ‘house of brands’, but as part of a wider digital strategy:
Chris Hunt, head of retail at law firm Gowling WLG, argues that Debenhams lacked the ‘brand resonance’ needed to survive this year’s retail crisis.Chris Hunt, head of retail at law firm Gowling WLG, argues that Debenhams lacked the ‘brand resonance’ needed to survive this year’s retail crisis.
In the City, the FTSE 100 index of blue-chip shares has posted its biggest daily jump in over three weeks.In the City, the FTSE 100 index of blue-chip shares has posted its biggest daily jump in over three weeks.
Optimism over the global economic recovery, vaccine rollouts, and a touch of Brexit deal hopes all drove shares higher - despite the gloom in Britain’s retail sector.Optimism over the global economic recovery, vaccine rollouts, and a touch of Brexit deal hopes all drove shares higher - despite the gloom in Britain’s retail sector.
The FTSE 100 gained 118 points, or 1.9%, to close at 6384 -- more than recovering yesterday’s losses. That’s its best performance since Monday 9th November, when Pfizer’s vaccine trial results sent global stock markets racing higher.The FTSE 100 gained 118 points, or 1.9%, to close at 6384 -- more than recovering yesterday’s losses. That’s its best performance since Monday 9th November, when Pfizer’s vaccine trial results sent global stock markets racing higher.
UK housebuilders and banks - two sectors vulnerable to an economic downturn or a no-deal Brexit - led the rally, with Taylor Wimpey jumping 7.8%, Lloyds Banking Group up 7.4% and Persimmon gaining 6.9%.UK housebuilders and banks - two sectors vulnerable to an economic downturn or a no-deal Brexit - led the rally, with Taylor Wimpey jumping 7.8%, Lloyds Banking Group up 7.4% and Persimmon gaining 6.9%.
Other European markets posted gains, with the Stoxx 600 up 0.65%. Strong factory data from China also lifted stocks on Wall Street, where the S&P 500 and the Nasdaq are on track for record closes again.Other European markets posted gains, with the Stoxx 600 up 0.65%. Strong factory data from China also lifted stocks on Wall Street, where the S&P 500 and the Nasdaq are on track for record closes again.
David Madden, analyst at CMC Markets, explains:David Madden, analyst at CMC Markets, explains:
Heads-up: Sky’s Adam Parsons tweets that the Brexit trade talks might not have moved into the tunnel after all!Heads-up: Sky’s Adam Parsons tweets that the Brexit trade talks might not have moved into the tunnel after all!
The pound’s still hovering over the $1.34 mark for the first time in three months, though, suggesting optimism of a deal hasn’t faded.The pound’s still hovering over the $1.34 mark for the first time in three months, though, suggesting optimism of a deal hasn’t faded.
Here’s Reuters’ take on the pound’s jump:Here’s Reuters’ take on the pound’s jump:
More here: Sterling jumps on report Brexit negotiations have entered “tunnel” stageMore here: Sterling jumps on report Brexit negotiations have entered “tunnel” stage
Sterling has hit a three-month high against the US dollar this evening, after a report that the UK-EU trade deal talks have entered the ‘tunnel’ stage of intensive negotiations.Sterling has hit a three-month high against the US dollar this evening, after a report that the UK-EU trade deal talks have entered the ‘tunnel’ stage of intensive negotiations.
The pound surged after Tom Newton Dunn, Chief Political Commentator on Times Radio tweeted that “UK-EU trade deal talks have, at long last, entered the mythical tunnel”.The pound surged after Tom Newton Dunn, Chief Political Commentator on Times Radio tweeted that “UK-EU trade deal talks have, at long last, entered the mythical tunnel”.
Newton Dunn added that there are “hopes (on both sides)” of a deal by the end of this week, but also cautioned that it could “still yet all fall apart”.Newton Dunn added that there are “hopes (on both sides)” of a deal by the end of this week, but also cautioned that it could “still yet all fall apart”.
This sent the pound up by a cent to $1.344 against the dollar, the highest point since early September, although it’s dipped back slightly since.This sent the pound up by a cent to $1.344 against the dollar, the highest point since early September, although it’s dipped back slightly since.
My colleague Peter Walker explained how the tunnel works last year:My colleague Peter Walker explained how the tunnel works last year:
Debenham’s former chairman, Sir Ian Cheshire, is hopeful that some jobs will be saved at the stricken department store chain.Debenham’s former chairman, Sir Ian Cheshire, is hopeful that some jobs will be saved at the stricken department store chain.
Cheshire told Sky News this morning that it was a “sad day” for Debenhams, particularly for its staff in the run-up to Christmas.Cheshire told Sky News this morning that it was a “sad day” for Debenhams, particularly for its staff in the run-up to Christmas.
He expects stores would trade through the Christmas season, adding:He expects stores would trade through the Christmas season, adding:
Cheshire predicts that some of Debenhams profitable stores could be split up between different buyers. Its website, and some of its own label brands -- the Designers at Debenhams concept -- are “interesting assets”, and will carry on in some forms, but be digitally led, he added.Cheshire predicts that some of Debenhams profitable stores could be split up between different buyers. Its website, and some of its own label brands -- the Designers at Debenhams concept -- are “interesting assets”, and will carry on in some forms, but be digitally led, he added.
Earlier in parliament, Chancellor Rishi Sunak said the Government “stands ready” to help workers affected by job losses at Arcadia and Debenhams.Earlier in parliament, Chancellor Rishi Sunak said the Government “stands ready” to help workers affected by job losses at Arcadia and Debenhams.
Press Association has the details:Press Association has the details:
The OECD’s latest economic outlook makes tough reading for the UK - showing that Britain’s economy will be among the hardest hit by the pandemic.The OECD’s latest economic outlook makes tough reading for the UK - showing that Britain’s economy will be among the hardest hit by the pandemic.
The Paris-based thinktank expects the UK economy to shrink by 11.2% this year, and only grow by 4.2% in 2021 and 4.1% in 2022.The Paris-based thinktank expects the UK economy to shrink by 11.2% this year, and only grow by 4.2% in 2021 and 4.1% in 2022.
That’s much weaker than the global average. The OECD predicts the world economy will shrink by 4.2% in 2020, then by 4.2% next year and 3.7% in 2021.That’s much weaker than the global average. The OECD predicts the world economy will shrink by 4.2% in 2020, then by 4.2% next year and 3.7% in 2021.
The eurozone is expected to shrink by 7.5% this year, followed by 3.6% growth in 2021, while the US is on track for a 3.7% contraction then a 3.2% recovery.The eurozone is expected to shrink by 7.5% this year, followed by 3.6% growth in 2021, while the US is on track for a 3.7% contraction then a 3.2% recovery.
A strong recovery in China should GDP back to pre-crisis levels by the end of 2021, it forecasts.A strong recovery in China should GDP back to pre-crisis levels by the end of 2021, it forecasts.
But as this chart shows, Britain is far behind - with Argentina the only G20 nation expected to perform worse.But as this chart shows, Britain is far behind - with Argentina the only G20 nation expected to perform worse.
The OECD predicts the UK will suffer weak business investment, increased border costs once the Brexit transition ends, and a rise in unemployment and bankruptcies - although the furlough scheme and Covid-19 crisis loans will cushion the blows.The OECD predicts the UK will suffer weak business investment, increased border costs once the Brexit transition ends, and a rise in unemployment and bankruptcies - although the furlough scheme and Covid-19 crisis loans will cushion the blows.
In its report, it says the UK’s ‘initially strong rebound’ in the July-September quarter is set to go into reverse this quarter, after Covid-19 cases rose again.In its report, it says the UK’s ‘initially strong rebound’ in the July-September quarter is set to go into reverse this quarter, after Covid-19 cases rose again.
It also warns that growth could be even weaker if the health situation worsens further, saying:It also warns that growth could be even weaker if the health situation worsens further, saying:
The forecasts underline that Britain is set to suffer more economic pain from the pandemic than most other nations, as well as running up a record deficit and suffering over 58,000 deaths (within 28 days of positive test)The forecasts underline that Britain is set to suffer more economic pain from the pandemic than most other nations, as well as running up a record deficit and suffering over 58,000 deaths (within 28 days of positive test)
As the FT’s Chris Giles puts it:As the FT’s Chris Giles puts it:
FT: UK economic recovery from Covid crisis forecast to be among world’s slowestFT: UK economic recovery from Covid crisis forecast to be among world’s slowest
Overall, the OECD says the outlook for the global economy is improving, but the crisis isn’t over.Overall, the OECD says the outlook for the global economy is improving, but the crisis isn’t over.
OECD chief economist Laurence Boone cautions:OECD chief economist Laurence Boone cautions:
And for that reason, the OECD is also urging governments not to risk choking the recovery by cutting spending too soon. More here:And for that reason, the OECD is also urging governments not to risk choking the recovery by cutting spending too soon. More here:
The collapse of Debenhams will leave vacant spaces on the high street that will “impossible to fill” in a like-for-like way, warns Dr Gordon Fletcher of University of Salford Business School.The collapse of Debenhams will leave vacant spaces on the high street that will “impossible to fill” in a like-for-like way, warns Dr Gordon Fletcher of University of Salford Business School.
UK factories are holding up better than the retailers.....thanks to Brexit stockpiling.UK factories are holding up better than the retailers.....thanks to Brexit stockpiling.
New figures this morning showed that output growth, and new business orders, both accelerated last month, helping to slow (but not stop) the downturn in employment.New figures this morning showed that output growth, and new business orders, both accelerated last month, helping to slow (but not stop) the downturn in employment.
Data firm Markit, which compiles the monthly PMI report, explains:Data firm Markit, which compiles the monthly PMI report, explains:
But the consumer goods sector had a poorer November, with back-to-back decreases in both production and new business.But the consumer goods sector had a poorer November, with back-to-back decreases in both production and new business.
Duncan Brock of the Chartered Institute of Procurement & Supply says manufacturers were running at full pelt to meet Brexit stockpiling demands, but 2021 could bring disruption:Duncan Brock of the Chartered Institute of Procurement & Supply says manufacturers were running at full pelt to meet Brexit stockpiling demands, but 2021 could bring disruption: